CBA Official: Mitigation Of Banking Supervision Standards Will Resul

CBA OFFICIAL: MITIGATION OF BANKING SUPERVISION STANDARDS WILL RESULT IN 60% GROWTH OF CREDITING

Noyan Tapan
Sep 6, 2007

YEREVAN, SEPTEMBER 6, NOYAN TAPAN. The Central Bank of Armenia
(CBA) is continuing to take measures aimed at mitigation of banking
supervision. It is forecast that thanks to this, the volume of
crediting by the RA banking system will grow by 60% by results of
2007 as compared with last year (as of December 31, 2006, the total
amount of credits provided by Armenian banks and their bills receivable
made 298 bln 310 mln 37 thousand drams or about 820.7 mln USD), the
head of the CBA Financial System Policy and Analyses Department David
Sargsian said at the September 6 press conference.

According to D. Sargsian, the RA banking system is currently at the
third stage of development, whose main purpose is to increase sharply
the volumes of crediting and to enhance access to financial services
from the terrirorial point of view. The speaker noted that during the
first stage of formation of the RA banking system (1991-1996), the
main task was formation of private commercial banks: at the end of this
stage, more than 70 banks were operating in Armenia. The second stage
was marked by the process of "cleansing" the banking system when the
banks not in line with international standards stopped their operation.

In his words, taking into account the fact that Armenian banks are
now at a qualitatively high level of risk management, the CBA has
considered it expedient to mitigate requirements on regulation of
banking activity. It was forecast that thanks to such mitigation,
the banks will reduce their expenses and use available resources
for crediting.

He noted that in early 2007 the CBA mitigated the prudential standard
of current liquidity of banks, which allowed banks to allocate
additional 27 billion drams to crediting. The capital adequacy
standard and the overall liquidity standard will be mitigated soon
as well, allowing banks to allocate at least additional 35 bln drams
to crediting.

D. Sargsian added that as a result of using another package of
amendments in normative requirements, considerable incentives have
been created for increasing the range of financial services and
expanding their volumes and territorial coverage. Henceforth the
banks will be able to implement movable crediting activity without
opening their branches in regions. The technical requirements to the
premises of branches have been mitigated as well, thanks to which
expenses on establishment of a branch will be reduced. At the same
time, the branch management of those banks that have an efficient
internal system of staff qualification and training will no longer
have to undergo qualification checks at the CBA.

D. Sargsian said that thanks to the indicated measures, an
unprecedented growth of crediting (90 bln drams) was registered in
January-August 2007 on the same period of last year.

From: Emil Lazarian | Ararat NewsPress

Emil Lazarian

“I should like to see any power of the world destroy this race, this small tribe of unimportant people, whose wars have all been fought and lost, whose structures have crumbled, literature is unread, music is unheard, and prayers are no more answered. Go ahead, destroy Armenia . See if you can do it. Send them into the desert without bread or water. Burn their homes and churches. Then see if they will not laugh, sing and pray again. For when two of them meet anywhere in the world, see if they will not create a New Armenia.” - WS